Financial Markets Daily Report31 October 2025
As expected, the ECB kept interest rates unchanged (depo at 2%) and reinforced its meeting-by-meeting data-dependent strategy. Euro area sovereign yields edged higher, and equities had a mixed session across the region. On the macro front, euro area GDP grew 0.2% qoq in Q3 (1.3% yoy), up from 0.1% qoq in Q2.
Across the Atlantic, U.S. Treasury yields rose slightly as investors continued to digest a more hawkish-than-expected Fed. Stocks fell sharply as worries about AI spending weighed on mega-cap tech companies. Gold bounced back above $4,000/ounce as investors fled to quality.
Regarding trade developments, the U.S. and China announced a temporary trade truce, which involves the U.S. lowering tariffs on Chinese imports by 10%, and China removing export controls on rare earths while resuming purchases of several U.S. farm products. The dollar strengthened on news of the agreement (EURUSD below 1.16).